Overbought / Oversold

What do the terms "overbought" and "oversold" mean?

The term "overbought" expresses a technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors. Rank and file traders who were bullish and long have turned bearish and short.

The term "oversold" expresses a technical opinion that the market price has declined too steeply and too fast in relation to underlying fundamental factors; rank and file traders who were bearish and short have turned bullish. (Source: CFTC)